NEF calls for personal allowance to be replaced with 'weekly national allowance'

Think tank the New Economics Foundation (NEF) has called for the income tax personal allowance to be replaced with a new 'weekly personal allowance'.

In April 2019, the personal allowance will rise from £11,850 to £12,500. In a new report, the NEF stated that the expansion of the personal allowance is 'one of the most expensive and regressive public spending projects of the 21st century'.

It is urging the government to introduce a new weekly personal allowance of £48.08 for individuals resident in England, Wales and Northern Ireland, and an allowance of £45.68 for those in Scotland. The NEF said that, under its plans, eligibility for the allowance would be extended to everyone over the age of 18 with a national insurance number.

According to the think tank, payments would be administered by HMRC, and would be tax-free. The basic rate of income tax (starter rate in Scotland) would be 'applied to the first £1 of most forms of income'.

'The persistent increases to the personal allowance of income seen over the past decade represent one of the most expensive and regressive public spending initiatives of the 21st century so far,' said Alfie Stirling, Head of Economics at the NEF.

'With Brexit among a number of recessionary threats on the horizon, the weekly national allowance would not only help to shield families from the worst effects of recession, but would also aid future recovery by maintaining a minimum level of income and spending in the economy.'